Economic Policy and Manufacturing Performance in Developing Countries

Economic Policy and Manufacturing Performance in Developing Countries

Edited by Oliver Morrissey and Michael Tribe

This book considers the impact of economic reforms on manufacturing performance and explores policy options for promoting manufacturing. Using country-specific case studies spanning Africa, South Asia, South East Asia and Latin America, the authors examine the evidence for and against both trade liberalisation and government support policy.

Chapter 8: Small enterprise development in Cambodia: the role of credit

Ian Livingstone

Subjects: development studies, development economics, economics and finance, development economics, industrial economics


Ian Livingstone 1 INTRODUCTION Cambodia is a country still undergoing reconstruction. Most economic activity is informal, and national-level economic policies have little relevance to the mass of the population. Manufacturing activity is predominantly smallscale. This does not mean, however, that policy is irrelevant. Government policies are important in stimulating a vibrant small-scale sector, but perhaps there is a prior stage before such policies can have an impact. This prior stage is enterprise start-up, and the single most important policy issue in this regard is access to credit. In practice, at the micro level, most credit initiatives are by the private sector, specifically non-governmental organisations (NGOs), rather than government. It is this very early, core policy on which we focus in this chapter. Section 2 briefly reviews some statistical evidence regarding the nature and importance of small enterprises in Cambodia, to set the scene. Section 3 then discusses the constraints under which they operate. Some indications of the entrepreneurial capacities of rural Cambodians are suggested, based on the range of activities for which loans have been secured in two different regions of Cambodia. A number of exceptionally successful (so far) micro-credit programmes for small enterprise have been developed in the country by NGOs. These are described in Section 4. Section 5 identifies a major current issue. Should these programmes continue to focus, as in the past, on microenterprises and poverty among poor households attempting to diversify their sources of income or, as they appear to be doing increasingly,...

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